External Renders of Jewell Station Neometro developers?? story by Stephen Todd

Families looking to apartments for financial reprieve are being met with disappointment, with an acute shortage of affordable options on the market.

Despite being touted as a cheaper alternative to buying a house or townhouse, most family-sized developments in inner Melbourne are priced above $1 million.

It was an issue expectant parents Tom Burns, 40, and Sharon Nannery, 35, faced when they wanted to upsize from their two-bedroom apartment in St Kilda.

"Three-bedroom apartments seem to be marketed as a boutique space, but we were after something more functional," Mr Burns said.

The couple were willing to sacrifice a backyard in order to live close to their work. "Location is really important for our quality of life," Mr Burns said. "Less time in the car and on the train is good for us."

Developers have largely shifted focus away from investors, increasingly catering to young owner-occupiers in the inner suburbs. And in recent years, they have reported stronger demand for bigger dwellings from couples who are happy to raise a family in an apartment complex.

"The great Australian dream is changing from serenity to amenity," head of the Property Council of Victoria Sally Capp said.

Ms Capp said people were increasingly choosing lifestyle, services and access to jobs over a white picket fence and a piece of land.

In the ten years to 2016, the number of families with children living in medium-density buildings almost tripled, rising by 143 per cent, according to property advisory firm Charter Keck Cramer.

But it hasn't come cheap: many three-bedroom apartments on the market are penthouse suites with a hefty price tag, soaring well above $2 million in some cases.

And an analysis of property listings shows the vast majority of larger apartments up for sale haven't even been built yet.

Mr Burns and his wife have chosen to combine a one and two-bedroom apartment to create a family home. It was more cost efficient to combine two apartments on a lower level than buy a penthouse apartment.

The pair bought off-the-plan in a new Richmond project by Icon Developments and Beams Projects. Senior manager Brinn Tavener said the company offered "combination" apartments as a way to meet the changing needs of buyers.

"This is a Gen Y demographic that are maybe in their early 30s and have lived in apartments for 10 years," he said, adding that many chose to stay in apartments when their family grew. "They're used to it."

Mr Tavener said there was a shortage of affordable three-bedroom apartments on the market, but they were becoming more mainstream. "It just doesn't happen overnight," he said.